15th October 2021

A bill of health – What kind of Defined Benefit pension schemes will we pass to the next generation?

Today is World Student Day – an event which pays tribute to students globally.

In 2019/2020, there were around 2.46 million students at UK higher education institutions, and many will be entering the workforce this year.

In the next 10-15 years many of these graduates will be running departments or businesses of their own and making decisions about pension schemes for their employees.

As defined benefit pension experts, it makes us wonder what will be the state of health of the pension schemes they will inherit, and the debt within them?

Graduates trying to understand the current landscape for defined benefit pension schemes today will certainly find it a complex and confusing world. The world of pensions has been evolving fast in recent years, creating many challenges for trustees and sponsors of schemes.

We have seen increased scrutiny of the running of schemes from the Pension Regulator, more governance and regulatory issues creating pressures for trustees, cost challenges, risk management issues and big decisions to be made about the sustainability of schemes and how should they be run in the future – what will the end game be? And are these really the issues we want to pass to the next generation or should we be solving the problems now?

While defined benefit pension schemes were set up with the best of intentions, the need for strong governance – to protect members’ benefits – has placed an ever-increasing burden on trustees and employers alike. For smaller schemes, the cost of simply meeting red tape prevents them from being able to run as well as they should do or want to.

Whilst there are some existing options for schemes that try to address these problems, such as transferring to an insurer, their impact on reducing costs is ultimately, limited. They also leave members exposed to the risk of their employer’s failure.

We have set up Stoneport to solve the many problems smaller schemes face, and to help our next generation of business leaders, today’s students.

Stoneport’s unique, purpose-built structure enables it to bring different employers’ schemes together and run it as if it were one larger scheme. Its economies of scale enable schemes to achieve significant cost savings, improve member security, while also ensuring the highest levels of governance.

Stoneport removes many of the headaches facing the trustees of smaller schemes today and if these schemes choose this route, it means one less problem to hand on to the next generation, and our students of today.

Featured in HR News.